My Lords, I am grateful to the noble Viscount, Lord Hanworth, for his amendments, which have given us a further opportunity to consider these matters. As I have said, with my noble friend the Minister I will obviously consider what has been reported in Hansard. That is the important part of what we are doing in Committee.
The EPS focuses on helping us to meet our commitment to preventing new unabated coal-fired power stations being built by limiting the emissions of any new coal plant to around half of what they would otherwise be. The EPS supports the planning requirement that any new coal-fired power station must be equipped with CCS on at least at least 300 megawatts of its generating capacity, and will ensure that any new coal plant is constructed and operated in a way consistent with our decarbonisation objectives. Setting the limit at 450 grams per kilowatt hour will allow some flexibility to assist the economic optimisation of CCS demonstration projects and to manage the uncertainties associated with first-of-a-kind CCS projects.
We are concerned about going to a limit level of 300, which is below the emissions level of even the most efficient and cleanest new gas plant operating at base load as proposed by this amendment, because of the major implications it may have for this country’s security of supply and impact on consumers’ bills. The 300 limit would restrict the running hours of new and cleaner gas plant that are needed to replace ageing capacity retiring over the next decade, impacting on
the commercial viability of new gas plant and so deterring the much needed investment we need or increasing the costs of those investments.
In addition to introducing a significant risk to investors, the 300 limit could, under certain scenarios, lead to increased emissions and costs. For example, if new gas plants were restricted in their operating hours by the 300 limit, that could lead to the need to use less efficient coal or gas plants to make up the shortfall in operating hours in order to provide power for the country. This is a scenario that I am sure the noble Viscount does not intend to create through his amendment, but I think that there is a danger of that. Setting the EPS at 300 would also increase performance risk for CCS projects and, as a result, would increase the costs of projects that are currently coming forward now under the Government’s £1 billion CCS competition.
The noble Viscount’s Amendment 51KA would insert a provision into Clause 47 that would place a duty on the Secretary of State to publish and lay before Parliament a strategy for the phase-out of unabated coal generation within six months of Royal Assent. The measures in the Bill form part of a suite of policies designed to deliver the Government’s strategy for reducing carbon emissions, as set out in the Government’s carbon plan published in December 2011.
The Government have also published a number of low-carbon technology-specific plans, including road maps for carbon capture and storage and renewables. A reduction in unabated coal generation is therefore strongly implicit in these plans and policies, so I remain to be convinced that a strategy of the type proposed by the amendment is required.
6.45 pm
My noble friend Lord Deben asked whether the emissions target of 450 grams per kilowatt hour until 2044 is consistent with decarbonisation. The EPS is not a target but a limit on emissions from individual plants. Our EMR policies, CFDs and carbon pricing will determine the level of fossil fuel generation. The EPS is a backstop to our policy of no new coal without CCS.
We want to remove risk around investments in CCS and new gas, rather than introducing risk. Similarly, we want to reduce carbon emissions and not create a risk that more emissions will result at greater cost to consumers, which I fear the amendment would lead to. I therefore have concerns about the noble Viscount’s first amendment as well. As I have said, I shall look at Hansard because, given some of the detail that is being discussed, it is important to make sure that I fully understand it. However, for the reasons that I have outlined, I hope that the noble Viscount will feel able to withdraw his amendment.